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Investors continue to favor dividend investing, especially during times of market volatility and uncertainty. While it may not provide significant price gains, this approach serves as a reliable income stream for investors in all market conditions.
While there are plenty of options in the dividend ETF world, betting on the dividend aristocrats could be a wise move in the volatile market environment than high-dividend ones. Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year.
Recently, Roundhill Investments launched a new ETF called The Roundhill S&P Dividend Monarchs ETF (KNGS). Let’s delve deeper into it.
Inside KNGS
The Roundhill S&P Dividend Monarchs ETF is the first ever U.S. listed ETF to track the performance of Dividend Monarchs, a group of U.S. blue chip companies that have raised their dividends for 50+ successive years. The fund holds 36 stocks in total. The top holdings include MMM, Target, AbbVie, Coca-Cola, Johnson & Johnson, and PepsiCo. No stock accounts for more than 4.98% of the fund. The fund charges 35 bps in fees.
How Does It Fit In a Portfolio?
Considering there are not many companies that have been public since 1973, it's remarkable that these 30+ names have been in a position to consistently raise their dividends over the last 50 years, including through times of war, bursting of multiple financial bubbles, and even a pandemic. The issuer believes that the fund is not only dividend kings, it can act as "Recession Kings".
Beta of the S&P Dividend Monarchs Index is 0.78%, meaning that fund has lesser systematic risk. Amid high bond yields and growing geopolitical tensions, investors are flocking to dividend investing for safe and consistent returns. Dividends are major sources of consistent income for investors, though they do not offer dramatic price appreciation. These stocks tend to outperform in a choppy market and can reduce the volatility of a portfolio.
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and thus act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, these offer downside protection with their consistent increase in payouts.
Moreover, these stocks have strong foundational attributes, making them a promising and high-quality long-term investment in dividend growth. These attributes include a sustainable business model, a lengthy history of profitability, increasing cash flows, robust liquidity, a healthy balance sheet, and certain value-oriented characteristics.
Any Competition?
There are some ETFs in the market on the similar concepts. Those dividend aristocrat ETFs like Vanguard Dividend Appreciation ETF (VIG - Free Report) , SPDR S&P Dividend ETF (SDY - Free Report) , Schwab U.S. Dividend Equity ETF (SCHD - Free Report) and ProShares S&P 500 Aristocrats ETF (NOBL - Free Report) . The ETFs VIG, SDY, SCHD and NOBL charge 6 bps, 35 bps, 6 bps and 35 bps, respectively. Hence, although the newbie is not very cheap, it is not expensive either. The fund KNGS charges a decent expense ratio to remain competitive.
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Inside the Dividend Monarchs ETF (KNGS)
Investors continue to favor dividend investing, especially during times of market volatility and uncertainty. While it may not provide significant price gains, this approach serves as a reliable income stream for investors in all market conditions.
While there are plenty of options in the dividend ETF world, betting on the dividend aristocrats could be a wise move in the volatile market environment than high-dividend ones. Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year.
Recently, Roundhill Investments launched a new ETF called The Roundhill S&P Dividend Monarchs ETF (KNGS). Let’s delve deeper into it.
Inside KNGS
The Roundhill S&P Dividend Monarchs ETF is the first ever U.S. listed ETF to track the performance of Dividend Monarchs, a group of U.S. blue chip companies that have raised their dividends for 50+ successive years. The fund holds 36 stocks in total. The top holdings include MMM, Target, AbbVie, Coca-Cola, Johnson & Johnson, and PepsiCo. No stock accounts for more than 4.98% of the fund. The fund charges 35 bps in fees.
How Does It Fit In a Portfolio?
Considering there are not many companies that have been public since 1973, it's remarkable that these 30+ names have been in a position to consistently raise their dividends over the last 50 years, including through times of war, bursting of multiple financial bubbles, and even a pandemic. The issuer believes that the fund is not only dividend kings, it can act as "Recession Kings".
Beta of the S&P Dividend Monarchs Index is 0.78%, meaning that fund has lesser systematic risk. Amid high bond yields and growing geopolitical tensions, investors are flocking to dividend investing for safe and consistent returns. Dividends are major sources of consistent income for investors, though they do not offer dramatic price appreciation. These stocks tend to outperform in a choppy market and can reduce the volatility of a portfolio.
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and thus act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, these offer downside protection with their consistent increase in payouts.
Moreover, these stocks have strong foundational attributes, making them a promising and high-quality long-term investment in dividend growth. These attributes include a sustainable business model, a lengthy history of profitability, increasing cash flows, robust liquidity, a healthy balance sheet, and certain value-oriented characteristics.
Any Competition?
There are some ETFs in the market on the similar concepts. Those dividend aristocrat ETFs like Vanguard Dividend Appreciation ETF (VIG - Free Report) , SPDR S&P Dividend ETF (SDY - Free Report) , Schwab U.S. Dividend Equity ETF (SCHD - Free Report) and ProShares S&P 500 Aristocrats ETF (NOBL - Free Report) . The ETFs VIG, SDY, SCHD and NOBL charge 6 bps, 35 bps, 6 bps and 35 bps, respectively. Hence, although the newbie is not very cheap, it is not expensive either. The fund KNGS charges a decent expense ratio to remain competitive.